[lbo-talk] Obama defends Republic workers

Jordan Hayes jmhayes at j-o-r-d-a-n.com
Mon Dec 8 09:08:01 PST 2008



>> What does the depreciation of a home's value have to do with its
>> owner's ability to continue mortgage payments?

I agree that the original statement was poorly worded, but this is usually talking about people who bought a house with a 2/28 or 1/29 loan on the hope that they'd refinance out of the reset; with the drop in value and the inability to even get the same kind of loan they had, you have a situation where it's difficult to do, and as Doug says, difficult to want to try to do.

One reasonable angle here is that, because of the recession, interests rates have stayed low, so the fear of millions of ARM resets blowing up the market hasn't yet materialized: the resets have been modest. If you got a 1.75% 1yr teaser, you were in for a shock; but most people who have more conventional ARMS from a few years ago (non-teaser 3/1 and 5/1) are probably actually better off today than they were when they first locked.

I got a 5/1 in 2003 that was at 4.375% ... when it reset this year, it only went to 5.375%, and I refinanced into a 5.25% 5/1 ... your mileage may vary.

/jordan



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